Why Did Americans Stop Eating Kellogg’s Cereal?

CNBC
27 Nov 202214:29

Summary

TLDRKellogg, a cornerstone of American breakfast since 1906, faces significant challenges as cereal consumption declines due to health trends and competition. After a tumultuous period marked by lawsuits, a worker strike, and a plant fire, the company announced plans to split into three distinct entities in June 2022, aiming to enhance focus and recovery. Despite a resurgence in cereal sales during the COVID-19 pandemic, Kellogg's North American cereal segment continues to struggle. The company is shifting its branding strategy to promote cereals as snacks or desserts, seeking to leverage nostalgia while navigating a changing market landscape.

Takeaways

  • 📉 Cereal consumption in the U.S. has been declining over the past decade as consumers become more health-conscious.
  • 🧑‍🤝‍🧑 Kellogg's faced challenges including lawsuits, a worker strike, and a plant fire, affecting its cereal business significantly.
  • 🏭 The company was founded in 1906, with its first product, Corn Flakes, marketed as a healthy and easy-to-digest breakfast option.
  • 🐯 Kellogg's successfully marketed sugary cereals to children, creating iconic mascots like Tony the Tiger and expanding its product line.
  • ⚖️ In 1972, Kellogg was involved in an FTC case regarding alleged monopoly practices, which was ultimately dismissed.
  • 🍭 Health trends led to declining sales of sugary cereals by the late 1970s, prompting Kellogg to diversify its offerings with healthier products.
  • 🏺 Despite challenges, Kellogg saw a temporary surge in cereal sales during the COVID-19 pandemic, with an 8.5% increase in 2020.
  • 💼 In 2022, Kellogg announced plans to split into three companies to focus on distinct market segments: Global Snacking, North American Cereal, and Plant-based products.
  • 🔍 The cereal business is being repositioned as a snack or dessert option to adapt to changing consumer preferences.
  • 🚀 The future of Kellogg's cereal business remains uncertain, with hopes of resurgence as the company restructures and pivots towards profitable sectors.

Q & A

  • What factors have contributed to the decline in Kellogg's cereal sales over the past decade?

    -Kellogg's cereal sales have declined due to changing consumer preferences towards healthier, less processed foods, increased competition from other brands, and the rise of convenient breakfast options like bars.

  • What significant event in 2020 affected cereal consumption, and what was the impact on Kellogg's sales?

    -During the COVID-19 pandemic, there was a significant increase in cereal consumption, leading to an 8.5% year-over-year increase in Kellogg's net cereal sales in 2020.

  • How did Kellogg's respond to legal challenges regarding its marketing practices?

    -Kellogg's faced lawsuits concerning its nutritional claims, resulting in a $13 million settlement in 2021 where the company agreed to stop using terms like 'healthy' and 'nutritious' in its marketing.

  • What restructuring decision did Kellogg's announce in June 2022?

    -Kellogg's announced plans to split into three separate companies: Global Snacking, North American Cereal, and Plant, aiming to better focus on their distinct strategic priorities.

  • What were some of the innovative products Kellogg's introduced to adapt to changing consumer trends?

    -Kellogg's introduced products like Nutri-Grain cereal, High Happy Inside with prebiotics and probiotics, and collaborated with Little Debbie to create Nutty Buddy Cereal, as part of its strategy to appeal to health-conscious consumers.

  • How did the company address the criticism regarding its sugary cereals marketed to children?

    -Kellogg's settled an out-of-court agreement to improve marketing practices aimed at children and agreed to a set of nutrition standards.

  • What challenges did Kellogg's face in late 2021, and what were the outcomes?

    -In late 2021, Kellogg's faced a worker strike involving 1,400 employees and a major fire at its Memphis facility. The strike ended with a new contract that included a $1.10 hourly raise for workers.

  • What percentage of Kellogg's portfolio is accounted for by snacking, and how has that segment performed?

    -Snacking, including frozen breakfast products, accounts for 80% of Kellogg's portfolio, and snack sales grew by 5% in the first quarter of 2022, contrasting with a 10.3% decline in cereal sales.

  • How has nostalgia played a role in Kellogg's recent marketing strategies?

    -Kellogg's has tapped into nostalgia by revamping nostalgic brands and flavors, appealing to consumers' childhood favorites to boost cereal consumption.

  • What is the expected long-term outlook for Kellogg's North American cereal business after the restructuring?

    -While Kellogg's expects stable net sales over time for the North American cereal business, its long-term growth potential remains uncertain due to ongoing market challenges.

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Ähnliche Tags
Cereal IndustryKellogg's HistoryConsumer TrendsHealth ConsciousCompany StrategyMarket ChallengesNostalgia MarketingProduct InnovationBranding ChangesLegal Issues
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